Wednesday, November 28, 2012

The Facts about taxes and small business job creators

Would the small business job creators be hurt by allowing the Bush tax cuts for those making over $250,000 expire?  The simple answer is NO.
According to a 2010 study by the Tax Policy Center, the average small business owner has a business income of less  than $40,000 per year so they would not be affected by an expiration of tax cuts for individuals making more than $200,000 or more or couples making more than $250,000.

Only about 2.5% of Americans reporting business income would see their taxes increase if the tax cuts for the wealthy were not extended.  These people are NOT mom-and-pop business owners.  They are largely high income doctors, lawyers, investors and people who own chains of businesses like grocery stores or dry cleaners and/or a lot of real estate.
Would higher taxes on these high income business owners be a job killer?  The evidence is mixed.  In fact, some research indicates that higher taxes on upper income individuals will encourage business formation and hiring because higher income individuals will create new businesses in order to shelter more of their income.  In other words, higher taxes can actually encourage investment and hiring.

Bottom line:  When someone tells you that raising taxes on the rich will be a job killer, they don't know what they are talking about.

Read the research here:

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